The heterogenous impact of tariff and NTM on total factor productivity of Indonesian firms

.center[
# Tariff and Non-Tariff Measures: Heterogenous Impacts on Productivity  of Indonesian firms
]
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Krisna Gupta  
Crawford PhD Seminar  
October 2, 2020  
Arianto Patunru, Paul Gretton, Budy Resosudarmo

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<br />

# Content

- introduction
- literature review
- data
- method
- results
- discussion & policy recommendations

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# Introduction

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<br />

# Introduction

- Emphasize on tech upgrade

- also on export-led  growth

- This means more openness:

- financing R&D
 - import `$\Rightarrow$` tech-upgrade (Castellani and Fassio 2019)
]

.pull-right[
![Indonesia 4.0](making.PNG)  
Source: [kemenperin.go.id](https://www.kemenperin.go.id/download/19347)
]

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<br />

# Trend is on the opposite

- However, Protectionism is on the rise, including in Indonesia (Patunru 2018)

- Since GFC, While overall tariff went down, Non-Tariff Measures went up

- The role of Ministry of Industry is increasing (e.g., National Standards (SNI) and Local Content Requirement (LCR)) (Munadi 2019)

- Pandemic has accelerated the trend, potentially using tariff as well

- Protectionism policies may lead to more policies:
 - US trade war Case: iron `$\Rightarrow$` appliances
 - Indonesian Case: corn & soybean `$\Rightarrow$` chicken, mobile phone

---

<br />

# Introduction

- The straightforward question:

> To what extent tariff and NTMs affect firm's productivity?

- Further investigation is conducted:

- does size matter? (core question since Melitz (2003))
 
 - how does protectionism affect employment?
 
 - can NTMs reduces firms' imports in general?
 
- Building from Amiti and Konnings (2007), I estimate TFP and use it as the dependent variable

- Key data sources:
  - Tariff data are scrapped from MoF regulations
  - NTM from TRAINS database
  - Firm's characteristics & trade: Survei Industri and Customs data from BPS from 2008 to 2012

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# Brief Literature Review

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<br />

# On trade and industry

- On the role of international trade and trade policies to firm's performance, literature is abundant:

- Help firm **access better inputs** (Amiti and Konings 2007; Bas and Strauss-Kahn 2014; Castellani and Fassio 2019; Ing, Yu and Zhang 2019)
  - Help firms **innovate** and be **more productive** (Bas and Strauss-Kahn 2014, Pierola, Fernandez and Farole 2018; Ing, Yu and Zhang 2019; Pane and Patunru 2019)
  - Help firms from developing countries **access** the more lucrative **foreign markets** (An and Maskus 2009; Cadot et al. 2015; Fugazza, Olarreaga and Ugarte 2017)

- How to measure performance of industries and firms:
  
  - most of the literature **uses export** (value, quantity, price, scope)
  - some criticism includes **endogeneity** and the role of export to more **meaningful metrics** (such as GDP, employment and wage)
  - The alternative is using **TFP** (Amiti and Konings 2007; Pane and Patunru 2019)
  
---

<br />

# On Using TFP

- Using TFP is preferable (Indonesian context):
  
  - Trade policy is arguably 'less endogenous' to firm's TFP:
        - Indonesian government often aim for CAD (Patunru 2018), not firms TFP.
        - Manufacturing Firms' influence over tariff is less strong (Amiti and Konings 2007; Mobarak and Purbasari 2005)
  
  - Firm's TFP is a more meaningful metric than export

- TFP estimation:
  - non-linear method (Henningsen and Henningsen 2012) has less restriction, but it is harder to converge and contain less economic intuition.
  - Linear method is preferable but endogeneity needs to be treated:
      - using investment proxy (Olley and Pakes 1998)
      - using intermediate input proxy (Amiti and Konings 2007; Levinsohn and Petrin 2003)

---

<br />

# On Trade Policies

- The impact of tariff is established, but NTM's impact is mixed (Kee et al. 2009; Cadot et al. 2015)

### On NTMs:

- Price-difference method & Indonesian context (Marks 2018):
  - NTMs correlate with higher domestic price
  - Hard to get consistent data on price
  - possibility that price reflects quality
  
- Most are using categorical variable with AVE-style estimation

- UNCTAD (2017) built an NTM database called TRAINS:
  - Less judgmental (NTM vs NTB)
  - lack depth (Cadot et al. 2015)

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# Data

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<br />

# Firms

- Survei Industri (SI), BPS
  - follows many Indonesian manufacturing since 1970s
  - infos include factor used, foreign ownership, output, fraction of export and import
  - unbalanced, unfortunately
  - Inconsistent fixed asset and energy consumption
  
- Customs data
  - 2008-2012 with firm id to integrate with SI
  - varies with countries and HS-8-digit
  - not exactly match one-on-one with SI
  - can't say for sure if the import is directly used for production

- Not all firms reporting export and import in SI exist in the customs data, and vice-versa
  - may be using third party traders
  
---

<br />

### Firms' Characteristics

Table 1. Firms' characteristics, 2018-2012
<table class="table table-striped" style="font-size: 9px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Characteristics </th>
   <th style="text-align:left;"> All_SI </th>
   <th style="text-align:left;"> Non_customs </th>
   <th style="text-align:left;"> Customs_only </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> foreign ownership (%) </td>
   <td style="text-align:left;"> 8.15 </td>
   <td style="text-align:left;"> 5.96 </td>
   <td style="text-align:left;"> 34.77 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (26.17) </td>
   <td style="text-align:left;"> (22.60) </td>
   <td style="text-align:left;"> (45.06) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> fraction of output exported (%) </td>
   <td style="text-align:left;"> 22.51 </td>
   <td style="text-align:left;"> 0.21 </td>
   <td style="text-align:left;"> 0.4 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (37.52) </td>
   <td style="text-align:left;"> (0.37) </td>
   <td style="text-align:left;"> (0.42) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> fraction of input imported (%) </td>
   <td style="text-align:left;"> 0.08 </td>
   <td style="text-align:left;"> 0.07 </td>
   <td style="text-align:left;"> 0.31 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.24) </td>
   <td style="text-align:left;"> (0.21) </td>
   <td style="text-align:left;"> (0.38) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> no. of labour employed </td>
   <td style="text-align:left;"> 191.07 </td>
   <td style="text-align:left;"> 162.75 </td>
   <td style="text-align:left;"> 535.44 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (711.73) </td>
   <td style="text-align:left;"> (602.46) </td>
   <td style="text-align:left;"> (1,457.65) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> capital stock (Million IDR) </td>
   <td style="text-align:left;"> 198 </td>
   <td style="text-align:left;"> 194 </td>
   <td style="text-align:left;"> 250 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (44,800.00) </td>
   <td style="text-align:left;"> (46,500) </td>
   <td style="text-align:left;"> (10,400) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> total intermediate input (Million IDR) </td>
   <td style="text-align:left;"> 50.8 </td>
   <td style="text-align:left;"> 41 </td>
   <td style="text-align:left;"> 170 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (617.00) </td>
   <td style="text-align:left;"> (515) </td>
   <td style="text-align:left;"> (1,330) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> total output (Million IDR) </td>
   <td style="text-align:left;"> 90.3 </td>
   <td style="text-align:left;"> 73.3 </td>
   <td style="text-align:left;"> 296 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (958.00) </td>
   <td style="text-align:left;"> (861) </td>
   <td style="text-align:left;"> (1,740) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> total value added (Million IDR) </td>
   <td style="text-align:left;"> 38.5 </td>
   <td style="text-align:left;"> 31.6 </td>
   <td style="text-align:left;"> 123 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (455.00) </td>
   <td style="text-align:left;"> (414) </td>
   <td style="text-align:left;"> (789) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> value added per labour (IDR) </td>
   <td style="text-align:left;"> 137,987.10 </td>
   <td style="text-align:left;"> 126,074 </td>
   <td style="text-align:left;"> 282,857 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (2,515,300.00) </td>
   <td style="text-align:left;"> (2,600,177) </td>
   <td style="text-align:left;"> (1,012,159) </td>
  </tr>
  <tr>
   <td style="text-align:left;"> No. of observation </td>
   <td style="text-align:left;"> 117,598 </td>
   <td style="text-align:left;"> 108,662 </td>
   <td style="text-align:left;"> 8,915 </td>
  </tr>
</tbody>
</table>

---

<br />

# Average number of SPS is the highest

Table 2. Mean (St.Dev) of each NTM for all HS-6-digits
<table class="table table-striped" style="font-size: 11px; width: auto !important; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> NTM </th>
   <th style="text-align:left;"> Codes </th>
   <th style="text-align:left;"> N2008 </th>
   <th style="text-align:left;"> N2009 </th>
   <th style="text-align:left;"> N2010 </th>
   <th style="text-align:left;"> N2011 </th>
   <th style="text-align:left;"> N2012 </th>
   <th style="text-align:left;"> Examples </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Sanitary &amp; Phytosanitary (SPS) </td>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> A </td>
   <td style="text-align:left;"> 1.715 </td>
   <td style="text-align:left;"> 2.337 </td>
   <td style="text-align:left;"> 2.222 </td>
   <td style="text-align:left;"> 2.255 </td>
   <td style="text-align:left;"> 2.774 </td>
   <td style="text-align:left;"> Authorization requirements </td>
  </tr>
  <tr>
   
   
   <td style="text-align:left;"> (2.644) </td>
   <td style="text-align:left;"> (4.018) </td>
   <td style="text-align:left;"> (3.950) </td>
   <td style="text-align:left;"> (4.054) </td>
   <td style="text-align:left;"> (5.128) </td>
   <td style="text-align:left;"> Quarantine requirements </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Technical Barrier to Trade (TBT) </td>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> B </td>
   <td style="text-align:left;"> 0.481 </td>
   <td style="text-align:left;"> 0.455 </td>
   <td style="text-align:left;"> 0.641 </td>
   <td style="text-align:left;"> 0.682 </td>
   <td style="text-align:left;"> 0.663 </td>
   <td style="text-align:left;"> Testing requirements </td>
  </tr>
  <tr>
   
   
   <td style="text-align:left;"> (0.962) </td>
   <td style="text-align:left;"> (0.978) </td>
   <td style="text-align:left;"> (1.334) </td>
   <td style="text-align:left;"> (1.361) </td>
   <td style="text-align:left;"> (1.352) </td>
   <td style="text-align:left;"> labeling requirements </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Pre-shipment inspections and other formalities </td>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> C </td>
   <td style="text-align:left;"> 0.562 </td>
   <td style="text-align:left;"> 0.466 </td>
   <td style="text-align:left;"> 0.443 </td>
   <td style="text-align:left;"> 0.462 </td>
   <td style="text-align:left;"> 0.776 </td>
   <td style="text-align:left;"> pre-shipment inspection </td>
  </tr>
  <tr>
   
   
   <td style="text-align:left;"> (1.202) </td>
   <td style="text-align:left;"> (1.081) </td>
   <td style="text-align:left;"> (1.059) </td>
   <td style="text-align:left;"> (1.046) </td>
   <td style="text-align:left;"> (1.075) </td>
   <td style="text-align:left;"> only trough specific ports </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Non-automatic licensing, quotas, QC, etc </td>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> E </td>
   <td style="text-align:left;"> 0.623 </td>
   <td style="text-align:left;"> 0.56 </td>
   <td style="text-align:left;"> 0.605 </td>
   <td style="text-align:left;"> 0.618 </td>
   <td style="text-align:left;"> 0.594 </td>
   <td style="text-align:left;"> licensing </td>
  </tr>
  <tr>
   
   
   <td style="text-align:left;"> (0.809) </td>
   <td style="text-align:left;"> (0.818) </td>
   <td style="text-align:left;"> (0.873) </td>
   <td style="text-align:left;"> (0.861) </td>
   <td style="text-align:left;"> (0.853) </td>
   <td style="text-align:left;"> quota </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Price-control measures, extra taxes, charges </td>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> F </td>
   <td style="text-align:left;"> 0 </td>
   <td style="text-align:left;"> 0 </td>
   <td style="text-align:left;"> 0.015 </td>
   <td style="text-align:left;"> 0.014 </td>
   <td style="text-align:left;"> 0.016 </td>
   <td style="text-align:left;"> customs service fee </td>
  </tr>
  <tr>
   
   
   <td style="text-align:left;"> (0.000) </td>
   <td style="text-align:left;"> (0.000) </td>
   <td style="text-align:left;"> (0.168) </td>
   <td style="text-align:left;"> (0.165) </td>
   <td style="text-align:left;"> (0.168) </td>
   <td style="text-align:left;"> consumption tax </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Measures affecting competition </td>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> H </td>
   <td style="text-align:left;"> 0.019 </td>
   <td style="text-align:left;"> 0.052 </td>
   <td style="text-align:left;"> 0.05 </td>
   <td style="text-align:left;"> 0.048 </td>
   <td style="text-align:left;"> 0.046 </td>
   <td style="text-align:left;"> Only SOEs </td>
  </tr>
  <tr>
   
   
   <td style="text-align:left;"> (0.139) </td>
   <td style="text-align:left;"> (0.238) </td>
   <td style="text-align:left;"> (0.233) </td>
   <td style="text-align:left;"> (0.229) </td>
   <td style="text-align:left;"> (0.224) </td>
   <td style="text-align:left;"> - </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Export-related measures </td>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> P </td>
   <td style="text-align:left;"> 0.901 </td>
   <td style="text-align:left;"> 0.704 </td>
   <td style="text-align:left;"> 0.708 </td>
   <td style="text-align:left;"> 0.683 </td>
   <td style="text-align:left;"> 1.172 </td>
   <td style="text-align:left;"> export permit </td>
  </tr>
  <tr>
   
   
   <td style="text-align:left;"> (1.172) </td>
   <td style="text-align:left;"> (1.132) </td>
   <td style="text-align:left;"> (1.109) </td>
   <td style="text-align:left;"> (1.098) </td>
   <td style="text-align:left;"> (1.465) </td>
   <td style="text-align:left;"> export quota </td>
  </tr>
  <tr>
   <td style="text-align:left;"> observations </td>
   <td style="text-align:left;"> - </td>
   <td style="text-align:left;"> 1,675 </td>
   <td style="text-align:left;"> 2,204 </td>
   <td style="text-align:left;"> 2,318 </td>
   <td style="text-align:left;"> 2,400 </td>
   <td style="text-align:left;"> 2,510 </td>
   <td style="text-align:left;"> - </td>
  </tr>
</tbody>
</table>

---

<br />

# Simple average of tariffs from 2008-2012

.pull-left[
<table class="table table-striped" style="font-size: 11px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Kind </th>
   <th style="text-align:left;"> T2008 </th>
   <th style="text-align:left;"> T2009 </th>
   <th style="text-align:left;"> T2010 </th>
   <th style="text-align:left;"> T2011 </th>
   <th style="text-align:left;"> T2012 </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> MFN </td>
   <td style="text-align:left;"> 7.049 </td>
   <td style="text-align:left;"> 7.612 </td>
   <td style="text-align:left;"> 6.928 </td>
   <td style="text-align:left;"> 6.975 </td>
   <td style="text-align:left;"> 6.96 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (12.213) </td>
   <td style="text-align:left;"> (12.536) </td>
   <td style="text-align:left;"> (8.037) </td>
   <td style="text-align:left;"> (7.231) </td>
   <td style="text-align:left;"> (7.145) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> ASEAN </td>
   <td style="text-align:left;"> 2.478 </td>
   <td style="text-align:left;"> 2.49 </td>
   <td style="text-align:left;"> 0.15 </td>
   <td style="text-align:left;"> 0.15 </td>
   <td style="text-align:left;"> 0.15 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (11.094) </td>
   <td style="text-align:left;"> (11.206) </td>
   <td style="text-align:left;"> (4.559) </td>
   <td style="text-align:left;"> (4.559) </td>
   <td style="text-align:left;"> (4.559) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> China </td>
   <td style="text-align:left;"> 7.049 </td>
   <td style="text-align:left;"> 3.819 </td>
   <td style="text-align:left;"> 2.193 </td>
   <td style="text-align:left;"> 2.208 </td>
   <td style="text-align:left;"> 1.941 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (12.213) </td>
   <td style="text-align:left;"> (12.673) </td>
   <td style="text-align:left;"> (7.941) </td>
   <td style="text-align:left;"> (7.941) </td>
   <td style="text-align:left;"> (7.927) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> South Korea </td>
   <td style="text-align:left;"> 7.049 </td>
   <td style="text-align:left;"> 2.624 </td>
   <td style="text-align:left;"> 1.912 </td>
   <td style="text-align:left;"> 1.912 </td>
   <td style="text-align:left;"> 1.542 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (12.213) </td>
   <td style="text-align:left;"> (12.265) </td>
   <td style="text-align:left;"> (7.131) </td>
   <td style="text-align:left;"> (7.131) </td>
   <td style="text-align:left;"> (7.102) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> India </td>
   <td style="text-align:left;"> 7.049 </td>
   <td style="text-align:left;"> 7.612 </td>
   <td style="text-align:left;"> 6.394 </td>
   <td style="text-align:left;"> 5.874 </td>
   <td style="text-align:left;"> 5.341 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (12.213) </td>
   <td style="text-align:left;"> (12.536) </td>
   <td style="text-align:left;"> (7.809) </td>
   <td style="text-align:left;"> (7.517) </td>
   <td style="text-align:left;"> (7.322) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Japan </td>
   <td style="text-align:left;"> 6.11 </td>
   <td style="text-align:left;"> 4.639 </td>
   <td style="text-align:left;"> 3.274 </td>
   <td style="text-align:left;"> 2.618 </td>
   <td style="text-align:left;"> 2.23 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (11.967) </td>
   <td style="text-align:left;"> (12.356) </td>
   <td style="text-align:left;"> (7.353) </td>
   <td style="text-align:left;"> (7.114) </td>
   <td style="text-align:left;"> (6.487) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> ANZ </td>
   <td style="text-align:left;"> 7.049 </td>
   <td style="text-align:left;"> 6.446 </td>
   <td style="text-align:left;"> 2.948 </td>
   <td style="text-align:left;"> 2.278 </td>
   <td style="text-align:left;"> 1.545 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (12.213) </td>
   <td style="text-align:left;"> (11.922) </td>
   <td style="text-align:left;"> (6.765) </td>
   <td style="text-align:left;"> (6.318) </td>
   <td style="text-align:left;"> (6.065) </td>
  </tr>
</tbody>
</table>
]

.pull-right[
<table class="table table-striped" style="font-size: 11px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Kind </th>
   <th style="text-align:left;"> T2008 </th>
   <th style="text-align:left;"> T2009 </th>
   <th style="text-align:left;"> T2010 </th>
   <th style="text-align:left;"> T2011 </th>
   <th style="text-align:left;"> T2012 </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> MFN </td>
   <td style="text-align:left;"> 7.762 </td>
   <td style="text-align:left;"> 7.595 </td>
   <td style="text-align:left;"> 7.564 </td>
   <td style="text-align:left;"> 7.051 </td>
   <td style="text-align:left;"> 7.053 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (12.631) </td>
   <td style="text-align:left;"> (12.456) </td>
   <td style="text-align:left;"> (12.412) </td>
   <td style="text-align:left;"> (7.015) </td>
   <td style="text-align:left;"> (7.016) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> ASEAN </td>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="12"> - </td>
   <td style="text-align:left;"> 1.84 </td>
   <td style="text-align:left;"> 1.843 </td>
   <td style="text-align:left;"> 0.152 </td>
   <td style="text-align:left;"> 0.152 </td>
  </tr>
  <tr>
   
   
   <td style="text-align:left;"> (11.079) </td>
   <td style="text-align:left;"> (11.067) </td>
   <td style="text-align:left;"> (4.285) </td>
   <td style="text-align:left;"> (4.287) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> China </td>
   
   <td style="text-align:left;"> 3.665 </td>
   <td style="text-align:left;"> 2.743 </td>
   <td style="text-align:left;"> 1.85 </td>
   <td style="text-align:left;"> 1.579 </td>
  </tr>
  <tr>
   
   
   <td style="text-align:left;"> (12.342) </td>
   <td style="text-align:left;"> (12.392) </td>
   <td style="text-align:left;"> (6.853) </td>
   <td style="text-align:left;"> (6.823) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> South Korea </td>
   
   <td style="text-align:left;"> 2.564 </td>
   <td style="text-align:left;"> 2.56 </td>
   <td style="text-align:left;"> 1.698 </td>
   <td style="text-align:left;"> 1.326 </td>
  </tr>
  <tr>
   
   
   <td style="text-align:left;"> (12.087) </td>
   <td style="text-align:left;"> (12.084) </td>
   <td style="text-align:left;"> (6.395) </td>
   <td style="text-align:left;"> (6.349) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> India </td>
   
   <td style="text-align:left;vertical-align: middle !important;" rowspan="6"> - </td>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="6"> - </td>
   <td style="text-align:left;"> 5.409 </td>
   <td style="text-align:left;"> 4.991 </td>
  </tr>
  <tr>
   
   
   
   
   <td style="text-align:left;"> (6.726) </td>
   <td style="text-align:left;"> (6.620) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Japan </td>
   
   
   
   <td style="text-align:left;vertical-align: middle !important;" rowspan="4"> - </td>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="4"> - </td>
  </tr>
  <tr>
   
   
   
   
   
   
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> ANZ </td>
   
   
   
   
   
  </tr>
  <tr>
   
   
   
   
   
   
  </tr>
</tbody>
</table>
]

---

# Method

---

<br />

# TFP estimation

The framework uses two-stage regression:  
first, estimating TFP

`$$y_{it}=\beta_0 + \beta_ll_{it}+\beta_kk_{it}+\beta_mm_{it}+\beta_nn_{it}+\epsilon_{it}$$`
where:  
`$y_{it}$`  &nbsp; = log of revenue of firm i at time t  
`$l_{it}$`  &nbsp;&nbsp;&nbsp;= log of number of labour  
`$k_{it}$` &nbsp; = log of fixed assets  
`$m_{it}$` &nbsp;= log of intermediate materials  
`$n_{it}$` &nbsp; = log of energy consumption

Use the coefficient to predict TFP:

`$$TFP_{it}=y_{it}-\hat{\beta}_{l}l_{it}-\hat{\beta}_kk_{it}-\hat{\beta}_mm_{it}-\hat{\beta}_nn_{it}$$`
then estimate the second stage:

`$$TFP_{it}=\gamma_0+\gamma_{tariff}tariff_{it}+\gamma_{NTM}NTM_{it}+\eta_{it}$$`

---

<br />

# Some problems

let
`$$\epsilon_{it}=\omega_{it}+\mu_{it}$$`

where `$\mu_{it}$` is iid, while `$\omega_{it}$` is a productivity shock observed only by managers and may correlate with production decisions.

Olley and Pakes (1996) suggest `$\omega_{it}$` follows a first order Markov process and affects a firm's decision on how much to invest (or divest)

`$$I_{it}=i(k_{it},\omega_{it})$$`
inversed:

`$$\omega_{it}=\phi(I_{it},k_{it})$$`
Weaknesses of using investment (Levinsohn and Petrin 2003):
- zero investment featured in many datasets (including SI)
- less flexible compared to intermediate input

---

<br />

# Lvinsohn-Petrin Method

Levinsohn and Petrin (2003) suggest using intermediate input

`$$\omega_{it}=\phi(m_{it},k_{it})$$`
Therefore, the first-stage becomes:

`$$y_{it}=\beta_0 + \beta_ll_{it}+\beta_nn_{it}+\phi(m_{it},k_{it})+\mu_{it}$$`
Then proceed as follows to estimate TFP.

`$$TFP_{it}=y_{it}-\hat{\beta}_{l}l_{it}-\hat{\beta}_kk_{it}-\hat{\beta}_mm_{it}-\hat{\beta}_nn_{it}$$`
The command `levpet` in Stata allows for practical use of the LP method (Petrin, Poi and Levinsohn 2005).

---

# Trade policy variable

The dataset allows for multiple goods imported for each firm. The most practical way is to use coverage ratios.

`$$T_{it}=\frac{\sum tariff_{sc}V_{sc}}{\sum V_{sc}}*100$$`
where:
- `$T_{it}=$` tariff coverage ratio of firm i at time t,
- `$tariff_{sc}=$` tariff imposed on good s from country c at time t
- `$V_{sc}=$` value of good s imported from country c by firm i at time t

And for NTMs:

`$$C_{\theta it}=\frac{\sum NTM_{\theta sc}V_{sc}}{\sum V_{sc}}*100$$`

where `$NTM_{\theta sc}$` is the number of NTM `$\theta$` imposed on good `$s$` from country `$c$`

---

<br />

# Coverage ratio

- Table 5 shows simple mean (a) and coverage ratios (b)
- As expected, tariffs lie between MFN and FTAs
- Import licenses and quotas are more important than SPS and TBT
- Coverage ratios vs simple mean:
 - no visual difference on tariff
 - firms import more goods with NTMs

.pull-left[
Table 5a. Simple average
<table class="table table-striped" style="font-size: 10px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Variable </th>
   <th style="text-align:right;"> Mean </th>
   <th style="text-align:right;"> St.Dev. </th>
   <th style="text-align:right;"> Min </th>
   <th style="text-align:right;"> Max </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;"> Tariff </td>
   <td style="text-align:right;"> 3.503 </td>
   <td style="text-align:right;"> 4.971 </td>
   <td style="text-align:right;"> 0 </td>
   <td style="text-align:right;"> 150 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> SPS (A) </td>
   <td style="text-align:right;"> 0.108 </td>
   <td style="text-align:right;"> 0.718 </td>
   <td style="text-align:right;"> 0 </td>
   <td style="text-align:right;"> 29 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> TBT (B) </td>
   <td style="text-align:right;"> 0.140 </td>
   <td style="text-align:right;"> 0.663 </td>
   <td style="text-align:right;"> 0 </td>
   <td style="text-align:right;"> 13 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Pre-shipment inspection (C) </td>
   <td style="text-align:right;"> 0.028 </td>
   <td style="text-align:right;"> 0.214 </td>
   <td style="text-align:right;"> 0 </td>
   <td style="text-align:right;"> 5 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Licensing, quota, etc (E) </td>
   <td style="text-align:right;"> 0.321 </td>
   <td style="text-align:right;"> 0.550 </td>
   <td style="text-align:right;"> 0 </td>
   <td style="text-align:right;"> 6 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Price control etc (F) </td>
   <td style="text-align:right;"> 0.000 </td>
   <td style="text-align:right;"> 0.008 </td>
   <td style="text-align:right;"> 0 </td>
   <td style="text-align:right;"> 2 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Competition measures (H) </td>
   <td style="text-align:right;"> 0.007 </td>
   <td style="text-align:right;"> 0.083 </td>
   <td style="text-align:right;"> 0 </td>
   <td style="text-align:right;"> 2 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Export-related (P) </td>
   <td style="text-align:right;"> 0.063 </td>
   <td style="text-align:right;"> 0.376 </td>
   <td style="text-align:right;"> 0 </td>
   <td style="text-align:right;"> 7 </td>
  </tr>
</tbody>
</table>
]

.pull-left[
Table 5b. Coverage Ratio
<table class="table table-striped" style="font-size: 10px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Variable </th>
   <th style="text-align:right;"> Mean </th>
   <th style="text-align:right;"> St.Dev. </th>
   <th style="text-align:right;"> Min </th>
   <th style="text-align:right;"> Max </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;"> Tariff Coverage Ratio (T) </td>
   <td style="text-align:right;"> 3.420 </td>
   <td style="text-align:right;"> 5.646 </td>
   <td style="text-align:right;"> 0 </td>
   <td style="text-align:right;"> 150 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Coverage ratio A </td>
   <td style="text-align:right;"> 0.246 </td>
   <td style="text-align:right;"> 0.931 </td>
   <td style="text-align:right;"> 0 </td>
   <td style="text-align:right;"> 19 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Coverage ratio B </td>
   <td style="text-align:right;"> 0.202 </td>
   <td style="text-align:right;"> 0.478 </td>
   <td style="text-align:right;"> 0 </td>
   <td style="text-align:right;"> 9 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Coverage ratio C </td>
   <td style="text-align:right;"> 0.059 </td>
   <td style="text-align:right;"> 0.237 </td>
   <td style="text-align:right;"> 0 </td>
   <td style="text-align:right;"> 4 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Coverage ratio E </td>
   <td style="text-align:right;"> 0.337 </td>
   <td style="text-align:right;"> 0.468 </td>
   <td style="text-align:right;"> 0 </td>
   <td style="text-align:right;"> 6 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Coverage ratio F </td>
   <td style="text-align:right;"> 0.000 </td>
   <td style="text-align:right;"> 0.001 </td>
   <td style="text-align:right;"> 0 </td>
   <td style="text-align:right;"> 0 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Coverage ratio H </td>
   <td style="text-align:right;"> 0.014 </td>
   <td style="text-align:right;"> 0.083 </td>
   <td style="text-align:right;"> 0 </td>
   <td style="text-align:right;"> 1 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Coverage ratio P </td>
   <td style="text-align:right;"> 0.110 </td>
   <td style="text-align:right;"> 0.353 </td>
   <td style="text-align:right;"> 0 </td>
   <td style="text-align:right;"> 7 </td>
  </tr>
</tbody>
</table>
]

---

<br />

# Second-Stage

The second stage regression then:

`$$tfp_{it}=\gamma_0+\gamma_Tt_{it}+\sum_\theta \gamma_{\theta}c_{\theta it}+FO_{it}+\alpha_i+ISIC_i+\eta_{it}$$`

Where:
- `$tfp_{it} = log(TFP_{it})$`
- `$t_{it} = log(1+T_{it})$`
- `$c_{\theta it} = log(1+C_{\theta it})$`
- `$FO_{it} =$` foreign ownership of firm i at time t (%)

along with firm's fixed effect and ISIC dummy.

---

# Results

---

<br />

# Zero capital problem

Zero capital and energy consumption exists both for SI observations (left) and customs data (right).

---

<br />

# TFP Results

- `$k,n=0$` have smaller RTS and much smaller coefficient for `$k$` and `$n$`
- Lose `$\pm$` 30% of observations

.pull-left[
table 6a. `$k,n\geq0$`
<table class="table table-striped" style="font-size: 11px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Variables </th>
   <th style="text-align:left;"> All_SI </th>
   <th style="text-align:left;"> Non_customs </th>
   <th style="text-align:left;"> Customs_only </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Labour (l) </td>
   <td style="text-align:left;"> 0.354*** </td>
   <td style="text-align:left;"> 0.355*** </td>
   <td style="text-align:left;"> 0.268*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.005) </td>
   <td style="text-align:left;"> (0.005) </td>
   <td style="text-align:left;"> (0.011) </td>
  </tr>
  <tr>
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;vertical-align: middle !important;" rowspan="2"> Capital (k) </td>
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;"> 0 </td>
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;"> 0 </td>
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;"> 0 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;"> (0.000) </td>
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;"> (0.000) </td>
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;"> (0.002) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Energy (n) </td>
   <td style="text-align:left;"> 0.035*** </td>
   <td style="text-align:left;"> 0.037*** </td>
   <td style="text-align:left;"> 0.019*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.001) </td>
   <td style="text-align:left;"> (0.001) </td>
   <td style="text-align:left;"> (0.003) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> input (m) </td>
   <td style="text-align:left;"> 0.234*** </td>
   <td style="text-align:left;"> 0.251*** </td>
   <td style="text-align:left;"> 0.344*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.013) </td>
   <td style="text-align:left;"> (0.017) </td>
   <td style="text-align:left;"> (0.056) </td>
  </tr>
  <tr>
   <td style="text-align:left;"> RTS </td>
   <td style="text-align:left;"> 0.623 </td>
   <td style="text-align:left;"> 0.643 </td>
   <td style="text-align:left;"> 0.631 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Obs </td>
   <td style="text-align:left;"> 117,598 </td>
   <td style="text-align:left;"> 108,662 </td>
   <td style="text-align:left;"> 8,936 </td>
  </tr>
</tbody>
</table>
]

.pull-right[
Table 6b. `$k,n>0$`
<table class="table table-striped" style="font-size: 11px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Variables </th>
   <th style="text-align:left;"> All_SI </th>
   <th style="text-align:left;"> Non_customs </th>
   <th style="text-align:left;"> Customs_only </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Labour (l) </td>
   <td style="text-align:left;"> 0.307*** </td>
   <td style="text-align:left;"> 0.307*** </td>
   <td style="text-align:left;"> 0.254*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.005) </td>
   <td style="text-align:left;"> (0.006) </td>
   <td style="text-align:left;"> (0.015) </td>
  </tr>
  <tr>
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;vertical-align: middle !important;" rowspan="2"> Capital (k) </td>
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;"> 0.223*** </td>
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;"> 0.219*** </td>
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;"> 0.161*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;"> (0.014) </td>
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;"> (0.015) </td>
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;"> (0.038) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Energy (n) </td>
   <td style="text-align:left;"> 0.114*** </td>
   <td style="text-align:left;"> 0.114*** </td>
   <td style="text-align:left;"> 0.097*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.003) </td>
   <td style="text-align:left;"> (0.002) </td>
   <td style="text-align:left;"> (0.008) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> input (m) </td>
   <td style="text-align:left;"> 0.281*** </td>
   <td style="text-align:left;"> 0.255*** </td>
   <td style="text-align:left;"> 0.226*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.024) </td>
   <td style="text-align:left;"> (0.024) </td>
   <td style="text-align:left;"> (0.075) </td>
  </tr>
  <tr>
   <td style="text-align:left;"> RTS </td>
   <td style="text-align:left;"> 0.925 </td>
   <td style="text-align:left;"> 0.895 </td>
   <td style="text-align:left;"> 0.738 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> Obs </td>
   <td style="text-align:left;"> 73,265 </td>
   <td style="text-align:left;"> 68,294 </td>
   <td style="text-align:left;"> 4,971 </td>
  </tr>
</tbody>
</table>
]

---

<br />

# TFP Results

- table 7a over-estimates TFPs (not Indonesian miracle)
- 3 TFPs are used. 2 from the row customs only, table 7b:
  - TFP1 = estimated together with other firms in SI (all_SI)
  - TFP2 = estimated within customs only firms (customs_only)
  - Value added per labour is used for robustness check

.pull-left[
table 7a. TFP with `$k,n=0$`
<table class="table table-striped" style="font-size: 11px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Variables </th>
   <th style="text-align:left;"> All_SI </th>
   <th style="text-align:left;"> Non_customs </th>
   <th style="text-align:left;"> Customs_only </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> TFP all SI </td>
   <td style="text-align:left;"> 241,611.20 </td>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> - </td>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="4"> - </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (4,444,240) </td>
   
   
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Non customs </td>
   <td style="text-align:left;"> 221,284.30 </td>
   <td style="text-align:left;"> 216,246.40 </td>
   
  </tr>
  <tr>
   
   <td style="text-align:left;"> (4,542,027) </td>
   <td style="text-align:left;"> (4,361,599) </td>
   
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Customs only </td>
   <td style="text-align:left;"> 488,787.80 </td>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> - </td>
   <td style="text-align:left;"> 341,643.80 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (3,000,124) </td>
   
   <td style="text-align:left;"> (8,542,388) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Va/L </td>
   <td style="text-align:left;"> 137,987.1 </td>
   <td style="text-align:left;"> 126,073.5 </td>
   <td style="text-align:left;"> 282,856.5 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (2,515,300) </td>
   <td style="text-align:left;"> (2,600,177) </td>
   <td style="text-align:left;"> (1,012,159) </td>
  </tr>
  <tr>
   <td style="text-align:left;"> obs </td>
   <td style="text-align:left;"> 117,598 </td>
   <td style="text-align:left;"> 108,662 </td>
   <td style="text-align:left;"> 8,936 </td>
  </tr>
</tbody>
</table>
]

.pull-right[
Table 7b. TFP with `$k,n>0$`
<table class="table table-striped" style="font-size: 11px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Variables </th>
   <th style="text-align:left;"> All_SI </th>
   <th style="text-align:left;"> Non_customs </th>
   <th style="text-align:left;"> Customs_only </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> TFP all SI </td>
   <td style="text-align:left;"> 107,036.90 </td>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> - </td>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="4"> - </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (2,792,543) </td>
   
   
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Non customs </td>
   <td style="text-align:left;"> 98,534.27 </td>
   <td style="text-align:left;"> 115,020.70 </td>
   
  </tr>
  <tr>
   
   <td style="text-align:left;"> (2,826,922) </td>
   <td style="text-align:left;"> (2,719,907) </td>
   
  </tr>
  <tr>
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;vertical-align: middle !important;" rowspan="2"> Customs only </td>
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;"> 210,429.20 </td>
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;vertical-align: middle !important;" rowspan="2"> - </td>
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;"> 177,280.20 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;"> (2,331,985) </td>
   
   <td style="text-align:left;font-weight: bold;color: black !important;background-color: yellow !important;"> (4,609,524) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Va/L </td>
   <td style="text-align:left;"> 111,455.8 </td>
   <td style="text-align:left;"> 100,510.9 </td>
   <td style="text-align:left;"> 261,822.6 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (2,538,721) </td>
   <td style="text-align:left;"> (2,614,048) </td>
   <td style="text-align:left;"> (1,043,383) </td>
  </tr>
  <tr>
   <td style="text-align:left;"> obs </td>
   <td style="text-align:left;"> 73,265 </td>
   <td style="text-align:left;"> 68,294 </td>
   <td style="text-align:left;"> 4,971 </td>
  </tr>
</tbody>
</table>
]

---

background-image:url(normal.PNG)

<br />

# Trade policies vs TFP

##### observations = 4,971
- 1,512 firms
- only customs, `$k,n>0$`
- TFP1 estimated with all SI
- TFP2 estimated only customs
- `$VaL=\frac{Value Added}{Labour}$`

##### Table 8a:
- Simple OLS
- robust standard error
- TBT is good?
- Price control is big
- others are not significant
]

.pull-right[
<table class="table table-striped" style="font-size: 11px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Variables </th>
   <th style="text-align:left;"> TFP1 </th>
   <th style="text-align:left;"> TFP2 </th>
   <th style="text-align:left;"> VaL </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> tariff </td>
   <td style="text-align:left;"> -0.027 </td>
   <td style="text-align:left;"> -0.025 </td>
   <td style="text-align:left;"> -0.072*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.020) </td>
   <td style="text-align:left;"> (0.019) </td>
   <td style="text-align:left;"> (0.023) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> SPS </td>
   <td style="text-align:left;"> -0.094* </td>
   <td style="text-align:left;"> -0.079 </td>
   <td style="text-align:left;"> -0.164** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.048) </td>
   <td style="text-align:left;"> (0.049) </td>
   <td style="text-align:left;"> (0.073) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> TBT </td>
   <td style="text-align:left;"> 0.289*** </td>
   <td style="text-align:left;"> 0.254*** </td>
   <td style="text-align:left;"> 0.379*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.092) </td>
   <td style="text-align:left;"> (0.078) </td>
   <td style="text-align:left;"> (0.099) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Pre-shipment inspection </td>
   <td style="text-align:left;"> 0.082 </td>
   <td style="text-align:left;"> 0.067 </td>
   <td style="text-align:left;"> 0.295* </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.109) </td>
   <td style="text-align:left;"> (0.109) </td>
   <td style="text-align:left;"> (0.161) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> licensing </td>
   <td style="text-align:left;"> -0.064 </td>
   <td style="text-align:left;"> -0.036 </td>
   <td style="text-align:left;"> -0.004 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.059) </td>
   <td style="text-align:left;"> (0.058) </td>
   <td style="text-align:left;"> (0.087) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> price control </td>
   <td style="text-align:left;"> 281.992*** </td>
   <td style="text-align:left;"> 585.429*** </td>
   <td style="text-align:left;"> 539.567*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (87.628) </td>
   <td style="text-align:left;"> (111.394) </td>
   <td style="text-align:left;"> (134.382) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> competition measures </td>
   <td style="text-align:left;"> 0.114 </td>
   <td style="text-align:left;"> 0.084 </td>
   <td style="text-align:left;"> 0.111 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.320) </td>
   <td style="text-align:left;"> (0.315) </td>
   <td style="text-align:left;"> (0.348) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> export-related </td>
   <td style="text-align:left;"> 0.009 </td>
   <td style="text-align:left;"> 0.035 </td>
   <td style="text-align:left;"> 0.057 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.081) </td>
   <td style="text-align:left;"> (0.081) </td>
   <td style="text-align:left;"> (0.140) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> dummy FDI </td>
   <td style="text-align:left;"> 0.171*** </td>
   <td style="text-align:left;"> 0.176*** </td>
   <td style="text-align:left;"> 0.153** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.059) </td>
   <td style="text-align:left;"> (0.054) </td>
   <td style="text-align:left;"> (0.074) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> foreign ownership </td>
   <td style="text-align:left;"> 0.039*** </td>
   <td style="text-align:left;"> 0.040*** </td>
   <td style="text-align:left;"> 0.044*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.013) </td>
   <td style="text-align:left;"> (0.012) </td>
   <td style="text-align:left;"> (0.016) </td>
  </tr>
</tbody>
</table>
]

---

background-image:url(normal.PNG)

<br />

# Trade policies vs TFP

##### observations = 4,971
- 1,512 firms
- only customs, `$k,n>0$`
- TFP1 estimated with all SI
- TFP2 estimated only customs
- `$VaL=\frac{Value Added}{Labour}$`

##### Table 8b:
- Firm, year, and ISIC FE
- Only TBT remains significant
]

.pull-right[
<table class="table table-striped" style="font-size: 11px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Variables </th>
   <th style="text-align:left;"> TFP1 </th>
   <th style="text-align:left;"> TFP2 </th>
   <th style="text-align:left;"> VaL </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> tariff </td>
   <td style="text-align:left;"> -0.019 </td>
   <td style="text-align:left;"> -0.013 </td>
   <td style="text-align:left;"> 0.002 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.022) </td>
   <td style="text-align:left;"> (0.021) </td>
   <td style="text-align:left;"> (0.028) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> SPS </td>
   <td style="text-align:left;"> -0.011 </td>
   <td style="text-align:left;"> -0.025 </td>
   <td style="text-align:left;"> -0.038 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.065) </td>
   <td style="text-align:left;"> (0.062) </td>
   <td style="text-align:left;"> (0.082) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> TBT </td>
   <td style="text-align:left;"> 0.182** </td>
   <td style="text-align:left;"> 0.142* </td>
   <td style="text-align:left;"> 0.184* </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.078) </td>
   <td style="text-align:left;"> (0.074) </td>
   <td style="text-align:left;"> (0.098) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Pre-shipment inspection </td>
   <td style="text-align:left;"> -0.063 </td>
   <td style="text-align:left;"> -0.077 </td>
   <td style="text-align:left;"> -0.057 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.114) </td>
   <td style="text-align:left;"> (0.107) </td>
   <td style="text-align:left;"> (0.143) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> licensing </td>
   <td style="text-align:left;"> -0.093 </td>
   <td style="text-align:left;"> -0.095 </td>
   <td style="text-align:left;"> -0.116 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.076) </td>
   <td style="text-align:left;"> (0.072) </td>
   <td style="text-align:left;"> (0.096) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> price control </td>
   <td style="text-align:left;"> 138.837 </td>
   <td style="text-align:left;"> 374.367 </td>
   <td style="text-align:left;"> 116.246 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (1,557.471) </td>
   <td style="text-align:left;"> (1,469.290) </td>
   <td style="text-align:left;"> (1,957.694) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> competition measures </td>
   <td style="text-align:left;"> 0.27 </td>
   <td style="text-align:left;"> 0.238 </td>
   <td style="text-align:left;"> -0.048 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.351) </td>
   <td style="text-align:left;"> (0.332) </td>
   <td style="text-align:left;"> (0.442) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> export-related </td>
   <td style="text-align:left;"> 0.073 </td>
   <td style="text-align:left;"> 0.094 </td>
   <td style="text-align:left;"> 0.04 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.105) </td>
   <td style="text-align:left;"> (0.100) </td>
   <td style="text-align:left;"> (0.133) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> dummy FDI </td>
   <td style="text-align:left;"> 0.079 </td>
   <td style="text-align:left;"> 0.08 </td>
   <td style="text-align:left;"> -0.03 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.066) </td>
   <td style="text-align:left;"> (0.062) </td>
   <td style="text-align:left;"> (0.083) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> foreign ownership </td>
   <td style="text-align:left;"> 0.021 </td>
   <td style="text-align:left;"> 0.02 </td>
   <td style="text-align:left;"> 0.026 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.015) </td>
   <td style="text-align:left;"> (0.014) </td>
   <td style="text-align:left;"> (0.019) </td>
  </tr>
  <tr>
   <td style="text-align:left;"> R-sq </td>
   <td style="text-align:left;"> 0.023 </td>
   <td style="text-align:left;"> 0.025 </td>
   <td style="text-align:left;"> 0.061 </td>
  </tr>
</tbody>
</table>
]

---

<br \>

# Trade policy doesn't seem to matter

.pull-middle[
- Firms in the customs data (possibly) are different
  - they are generally bigger, and bigger firms may have ways to offset trade costs
  
- if size matters, it can be discovered using size interaction.

- `$l_{it}=log(Labour_{it})$` is used as a proxy

`$$size\_tfp_{it}=tfp_{it}+\gamma_Tt_{it}*l_{it}+\sum_\theta c_{\theta it}*l_{it}$$`
]

---

<br />

# Size Matters (Right=Left with FE)

.pull-left[
<table class="table table-striped" style="font-size: 10px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Variables </th>
   <th style="text-align:left;"> TFP1 </th>
   <th style="text-align:left;"> TFP2 </th>
   <th style="text-align:left;"> VaL </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> tariff </td>
   <td style="text-align:left;"> -0.357*** </td>
   <td style="text-align:left;"> -0.630*** </td>
   <td style="text-align:left;"> 0.071 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.067) </td>
   <td style="text-align:left;"> (0.065) </td>
   <td style="text-align:left;"> (0.090) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> tariff.l </td>
   <td style="text-align:left;"> 0.061*** </td>
   <td style="text-align:left;"> 0.112*** </td>
   <td style="text-align:left;"> -0.026 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.012) </td>
   <td style="text-align:left;"> (0.011) </td>
   <td style="text-align:left;"> (0.017) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> SPS </td>
   <td style="text-align:left;"> -0.250 </td>
   <td style="text-align:left;"> -0.517** </td>
   <td style="text-align:left;"> -0.124 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.234) </td>
   <td style="text-align:left;"> (0.260) </td>
   <td style="text-align:left;"> (0.381) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> SPS.l </td>
   <td style="text-align:left;"> 0.026 </td>
   <td style="text-align:left;"> 0.076* </td>
   <td style="text-align:left;"> -0.008 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.042) </td>
   <td style="text-align:left;"> (0.046) </td>
   <td style="text-align:left;"> (0.067) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> TBT </td>
   <td style="text-align:left;"> 0.213 </td>
   <td style="text-align:left;"> 0.194 </td>
   <td style="text-align:left;"> 0.486 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.483) </td>
   <td style="text-align:left;"> (0.419) </td>
   <td style="text-align:left;"> (0.408) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> TBT.l </td>
   <td style="text-align:left;"> 0.014 </td>
   <td style="text-align:left;"> 0.012 </td>
   <td style="text-align:left;"> -0.019 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.083) </td>
   <td style="text-align:left;"> (0.072) </td>
   <td style="text-align:left;"> (0.067) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Pre-shipment inspection </td>
   <td style="text-align:left;"> 0.418 </td>
   <td style="text-align:left;"> 0.749 </td>
   <td style="text-align:left;"> -0.005 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.531) </td>
   <td style="text-align:left;"> (0.558) </td>
   <td style="text-align:left;"> (0.758) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Pre-shipment inspection.l </td>
   <td style="text-align:left;"> -0.058 </td>
   <td style="text-align:left;"> -0.116 </td>
   <td style="text-align:left;"> 0.051 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.094) </td>
   <td style="text-align:left;"> (0.098) </td>
   <td style="text-align:left;"> (0.134) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> licensing </td>
   <td style="text-align:left;"> -0.650** </td>
   <td style="text-align:left;"> -1.444*** </td>
   <td style="text-align:left;"> 0.640* </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.266) </td>
   <td style="text-align:left;"> (0.263) </td>
   <td style="text-align:left;"> (0.371) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> licensing.l </td>
   <td style="text-align:left;"> 0.107** </td>
   <td style="text-align:left;"> 0.258*** </td>
   <td style="text-align:left;"> -0.119* </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.047) </td>
   <td style="text-align:left;"> (0.046) </td>
   <td style="text-align:left;"> (0.064) </td>
  </tr>
</tbody>
</table>
]

.pull-right[
<table class="table table-striped" style="font-size: 10px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Variables </th>
   <th style="text-align:left;"> TFP1 </th>
   <th style="text-align:left;"> TFP2 </th>
   <th style="text-align:left;"> VaL </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> tariff </td>
   <td style="text-align:left;"> -0.205** </td>
   <td style="text-align:left;"> -0.371*** </td>
   <td style="text-align:left;"> 0.259** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.083) </td>
   <td style="text-align:left;"> (0.077) </td>
   <td style="text-align:left;"> (0.104) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> tariff.l </td>
   <td style="text-align:left;"> 0.036** </td>
   <td style="text-align:left;"> 0.068*** </td>
   <td style="text-align:left;"> -0.048** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.015) </td>
   <td style="text-align:left;"> (0.014) </td>
   <td style="text-align:left;"> (0.019) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> SPS </td>
   <td style="text-align:left;"> -0.260 </td>
   <td style="text-align:left;"> -0.381 </td>
   <td style="text-align:left;"> 0.103 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.297) </td>
   <td style="text-align:left;"> (0.278) </td>
   <td style="text-align:left;"> (0.372) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> SPS.l </td>
   <td style="text-align:left;"> 0.043 </td>
   <td style="text-align:left;"> 0.062 </td>
   <td style="text-align:left;"> -0.029 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.051) </td>
   <td style="text-align:left;"> (0.048) </td>
   <td style="text-align:left;"> (0.064) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> TBT </td>
   <td style="text-align:left;"> 0.124 </td>
   <td style="text-align:left;"> 0.074 </td>
   <td style="text-align:left;"> 0.462 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.330) </td>
   <td style="text-align:left;"> (0.310) </td>
   <td style="text-align:left;"> (0.415) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> TBT.l </td>
   <td style="text-align:left;"> 0.011 </td>
   <td style="text-align:left;"> 0.013 </td>
   <td style="text-align:left;"> -0.051 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.058) </td>
   <td style="text-align:left;"> (0.055) </td>
   <td style="text-align:left;"> (0.073) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Pre-shipment inspection </td>
   <td style="text-align:left;"> -0.115 </td>
   <td style="text-align:left;"> 0.16 </td>
   <td style="text-align:left;"> -0.637 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.520) </td>
   <td style="text-align:left;"> (0.488) </td>
   <td style="text-align:left;"> (0.652) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Pre-shipment inspection.l </td>
   <td style="text-align:left;"> 0.01 </td>
   <td style="text-align:left;"> -0.043 </td>
   <td style="text-align:left;"> 0.1 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.093) </td>
   <td style="text-align:left;"> (0.087) </td>
   <td style="text-align:left;"> (0.117) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> licensing </td>
   <td style="text-align:left;"> -0.451 </td>
   <td style="text-align:left;"> -0.896*** </td>
   <td style="text-align:left;"> 1.477*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.311) </td>
   <td style="text-align:left;"> (0.292) </td>
   <td style="text-align:left;"> (0.390) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> licensing.l </td>
   <td style="text-align:left;"> 0.065 </td>
   <td style="text-align:left;"> 0.147*** </td>
   <td style="text-align:left;"> -0.295*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.056) </td>
   <td style="text-align:left;"> (0.052) </td>
   <td style="text-align:left;"> (0.070) </td>
  </tr>
</tbody>
</table>
]

---

<br />

# Size Matters (Right=Left with FE)

.pull-left[
<table class="table table-striped" style="font-size: 11px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Variables </th>
   <th style="text-align:left;"> TFP1 </th>
   <th style="text-align:left;"> TFP2 </th>
   <th style="text-align:left;"> VaL </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> price control </td>
   <td style="text-align:left;"> -8,559*** </td>
   <td style="text-align:left;"> -12,147*** </td>
   <td style="text-align:left;"> -29,052*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (3,235) </td>
   <td style="text-align:left;"> (2,984) </td>
   <td style="text-align:left;"> (4,029) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> price control.l </td>
   <td style="text-align:left;"> 1,383*** </td>
   <td style="text-align:left;"> 1,985*** </td>
   <td style="text-align:left;"> 4,718*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (514) </td>
   <td style="text-align:left;"> (474) </td>
   <td style="text-align:left;"> (640) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> competition </td>
   <td style="text-align:left;"> -1.155 </td>
   <td style="text-align:left;"> -0.693 </td>
   <td style="text-align:left;"> -2.269* </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (1.152) </td>
   <td style="text-align:left;"> (1.095) </td>
   <td style="text-align:left;"> (1.194) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> competition.l </td>
   <td style="text-align:left;"> 0.228 </td>
   <td style="text-align:left;"> 0.129 </td>
   <td style="text-align:left;"> 0.434** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.216) </td>
   <td style="text-align:left;"> (0.210) </td>
   <td style="text-align:left;"> (0.213) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> export-related </td>
   <td style="text-align:left;"> -0.341 </td>
   <td style="text-align:left;"> -0.475 </td>
   <td style="text-align:left;"> 0.343 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.357) </td>
   <td style="text-align:left;"> (0.385) </td>
   <td style="text-align:left;"> (0.679) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> export-related.l </td>
   <td style="text-align:left;"> 0.066 </td>
   <td style="text-align:left;"> 0.095 </td>
   <td style="text-align:left;"> -0.049 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.062) </td>
   <td style="text-align:left;"> (0.066) </td>
   <td style="text-align:left;"> (0.125) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> dummy FDI </td>
   <td style="text-align:left;"> 0.157*** </td>
   <td style="text-align:left;"> 0.152*** </td>
   <td style="text-align:left;"> 0.156** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.059) </td>
   <td style="text-align:left;"> (0.052) </td>
   <td style="text-align:left;"> (0.073) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> foreign ownership </td>
   <td style="text-align:left;"> 0.039*** </td>
   <td style="text-align:left;"> 0.040*** </td>
   <td style="text-align:left;"> 0.045*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.013) </td>
   <td style="text-align:left;"> (0.012) </td>
   <td style="text-align:left;"> (0.016) </td>
  </tr>
  <tr>
   <td style="text-align:left;"> R-sq </td>
   <td style="text-align:left;"> - </td>
   <td style="text-align:left;"> - </td>
   <td style="text-align:left;"> - </td>
  </tr>
</tbody>
</table>
]

.pull-right[
<table class="table table-striped" style="font-size: 11px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Variables </th>
   <th style="text-align:left;"> TFP1 </th>
   <th style="text-align:left;"> TFP2 </th>
   <th style="text-align:left;"> VaL </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> price control </td>
   <td style="text-align:left;"> -7,559 </td>
   <td style="text-align:left;"> -10,221 </td>
   <td style="text-align:left;"> -25,902 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (41,100) </td>
   <td style="text-align:left;"> (38,558) </td>
   <td style="text-align:left;"> (51,565) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> price control.l </td>
   <td style="text-align:left;"> 1,214 </td>
   <td style="text-align:left;"> 1,666 </td>
   <td style="text-align:left;"> 4,154 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (6,533) </td>
   <td style="text-align:left;"> (6,129) </td>
   <td style="text-align:left;"> (8,197) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> competition </td>
   <td style="text-align:left;"> -2.027 </td>
   <td style="text-align:left;"> -2.204* </td>
   <td style="text-align:left;"> -4.609*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (1.277) </td>
   <td style="text-align:left;"> (1.198) </td>
   <td style="text-align:left;"> (1.602) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> competition.l </td>
   <td style="text-align:left;"> 0.393* </td>
   <td style="text-align:left;"> 0.413** </td>
   <td style="text-align:left;"> 0.834*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.220) </td>
   <td style="text-align:left;"> (0.206) </td>
   <td style="text-align:left;"> (0.276) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> export-related </td>
   <td style="text-align:left;"> -0.096 </td>
   <td style="text-align:left;"> -0.291 </td>
   <td style="text-align:left;"> 0.48 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.476) </td>
   <td style="text-align:left;"> (0.446) </td>
   <td style="text-align:left;"> (0.597) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> export-related.l </td>
   <td style="text-align:left;"> 0.036 </td>
   <td style="text-align:left;"> 0.075 </td>
   <td style="text-align:left;"> -0.073 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.083) </td>
   <td style="text-align:left;"> (0.078) </td>
   <td style="text-align:left;"> (0.104) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> dummy FDI </td>
   <td style="text-align:left;"> 0.066 </td>
   <td style="text-align:left;"> 0.061 </td>
   <td style="text-align:left;"> -0.022 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.066) </td>
   <td style="text-align:left;"> 0.062 </td>
   <td style="text-align:left;"> (0.083) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> foreign ownership </td>
   <td style="text-align:left;"> 0.023 </td>
   <td style="text-align:left;"> 0.024* </td>
   <td style="text-align:left;"> 0.025 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.015) </td>
   <td style="text-align:left;"> (0.014) </td>
   <td style="text-align:left;"> (0.019) </td>
  </tr>
  <tr>
   <td style="text-align:left;"> R-sq </td>
   <td style="text-align:left;"> 0.029 </td>
   <td style="text-align:left;"> 0.041 </td>
   <td style="text-align:left;"> 0.07 </td>
  </tr>
</tbody>
</table>
]

---

<br />

# Employment effect

Results from VaL is confusing
- Perhaps employment is more sensitive to change in production cost compared to reported value added?
  
Use change in labour as LHS with the consequence of losing 2008

`$$\Delta l_t = log(L_t) - log(L_{t-1})$$`
Four regressions are conducted, involving:
- No size interaction (L0) and with size interaction (L1)
- with firm, year, ISIC FE and without FE

---

<br />

# Employment effect

.pull-left[
<table class="table table-striped" style="font-size: 10px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Variables </th>
   <th style="text-align:left;"> L0 </th>
   <th style="text-align:left;"> L0FE </th>
   <th style="text-align:left;"> L1 </th>
   <th style="text-align:left;"> L1FE </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> tariff </td>
   <td style="text-align:left;"> -0.008 </td>
   <td style="text-align:left;"> -0.028 </td>
   <td style="text-align:left;"> -0.260*** </td>
   <td style="text-align:left;"> -1.368*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.009) </td>
   <td style="text-align:left;"> (0.021) </td>
   <td style="text-align:left;"> (0.047) </td>
   <td style="text-align:left;"> (0.063) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> SPS </td>
   <td style="text-align:left;"> -0.028 </td>
   <td style="text-align:left;"> -0.120* </td>
   <td style="text-align:left;"> -0.176 </td>
   <td style="text-align:left;"> -1.650*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.020) </td>
   <td style="text-align:left;"> (0.066) </td>
   <td style="text-align:left;"> (0.153) </td>
   <td style="text-align:left;"> (0.230) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> TBT </td>
   <td style="text-align:left;"> 0.034 </td>
   <td style="text-align:left;"> -0.075 </td>
   <td style="text-align:left;"> 0.064 </td>
   <td style="text-align:left;"> 0.452* </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.038) </td>
   <td style="text-align:left;"> (0.075) </td>
   <td style="text-align:left;"> (0.236) </td>
   <td style="text-align:left;"> (0.257) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Pre-shipment </td>
   <td style="text-align:left;"> -0.041 </td>
   <td style="text-align:left;"> 0.121 </td>
   <td style="text-align:left;"> 0.066 </td>
   <td style="text-align:left;"> 1.997*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.040) </td>
   <td style="text-align:left;"> (0.100) </td>
   <td style="text-align:left;"> (0.349) </td>
   <td style="text-align:left;"> (0.370) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> licensing </td>
   <td style="text-align:left;"> -0.015 </td>
   <td style="text-align:left;"> -0.042 </td>
   <td style="text-align:left;"> -0.818*** </td>
   <td style="text-align:left;"> -4.455*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.033) </td>
   <td style="text-align:left;"> (0.073) </td>
   <td style="text-align:left;"> (0.190) </td>
   <td style="text-align:left;"> (0.237) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Price-control </td>
   <td style="text-align:left;"> 135 </td>
   <td style="text-align:left;"> 1,543 </td>
   <td style="text-align:left;"> 14,832*** </td>
   <td style="text-align:left;"> 6,015 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> -88 </td>
   <td style="text-align:left;"> -1,185 </td>
   <td style="text-align:left;"> (4,381) </td>
   <td style="text-align:left;"> -25,570 </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> competition </td>
   <td style="text-align:left;"> 0.072 </td>
   <td style="text-align:left;"> 0.094 </td>
   <td style="text-align:left;"> -0.999 </td>
   <td style="text-align:left;"> -2.788*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.289) </td>
   <td style="text-align:left;"> (0.387) </td>
   <td style="text-align:left;"> (1.563) </td>
   <td style="text-align:left;"> (1.006) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Export-related </td>
   <td style="text-align:left;"> -0.017 </td>
   <td style="text-align:left;"> 0.097 </td>
   <td style="text-align:left;"> -0.246 </td>
   <td style="text-align:left;"> -0.617* </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.028) </td>
   <td style="text-align:left;"> (0.091) </td>
   <td style="text-align:left;"> (0.203) </td>
   <td style="text-align:left;"> (0.333) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> foreign dummy </td>
   <td style="text-align:left;"> 0.031 </td>
   <td style="text-align:left;"> 0.147** </td>
   <td style="text-align:left;"> 0.028 </td>
   <td style="text-align:left;"> 0.091* </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.030) </td>
   <td style="text-align:left;"> (0.065) </td>
   <td style="text-align:left;"> (0.031) </td>
   <td style="text-align:left;"> (0.053) </td>
  </tr>
  <tr>
   <td style="text-align:left;"> observations </td>
   <td style="text-align:left;"> 3,726 </td>
   <td style="text-align:left;"> 3,726 </td>
   <td style="text-align:left;"> 3,726 </td>
   <td style="text-align:left;"> 3,726 </td>
  </tr>
</tbody>
</table>
]

.pull-right[
<table class="table table-striped" style="font-size: 10px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Variables </th>
   <th style="text-align:left;"> L0 </th>
   <th style="text-align:left;"> L0FE </th>
   <th style="text-align:left;"> L1 </th>
   <th style="text-align:left;"> L1FE </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> tariff*l </td>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="16"> - </td>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="16"> - </td>
   <td style="text-align:left;"> 0.043*** </td>
   <td style="text-align:left;"> 0.251*** </td>
  </tr>
  <tr>
   
   
   
   <td style="text-align:left;"> (0.008) </td>
   <td style="text-align:left;"> (0.011) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> SPS*l </td>
   
   
   <td style="text-align:left;"> 0.021 </td>
   <td style="text-align:left;"> 0.288*** </td>
  </tr>
  <tr>
   
   
   
   <td style="text-align:left;"> (0.027) </td>
   <td style="text-align:left;"> (0.041) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> TBT*l </td>
   
   
   <td style="text-align:left;"> -0.008 </td>
   <td style="text-align:left;"> -0.095** </td>
  </tr>
  <tr>
   
   
   
   <td style="text-align:left;"> (0.043) </td>
   <td style="text-align:left;"> (0.045) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Pre-shipment*l </td>
   
   
   <td style="text-align:left;"> -0.008 </td>
   <td style="text-align:left;"> -0.345*** </td>
  </tr>
  <tr>
   
   
   
   <td style="text-align:left;"> (0.061) </td>
   <td style="text-align:left;"> (0.066) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> licensing*l </td>
   
   
   <td style="text-align:left;"> 0.140*** </td>
   <td style="text-align:left;"> 0.809*** </td>
  </tr>
  <tr>
   
   
   
   <td style="text-align:left;"> (0.036) </td>
   <td style="text-align:left;"> (0.042) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Price-control*l </td>
   
   
   <td style="text-align:left;"> -2,312*** </td>
   <td style="text-align:left;"> -802 </td>
  </tr>
  <tr>
   
   
   
   <td style="text-align:left;"> (695) </td>
   <td style="text-align:left;"> (4,064) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> competition*l </td>
   
   
   <td style="text-align:left;"> 0.207 </td>
   <td style="text-align:left;"> 0.360** </td>
  </tr>
  <tr>
   
   
   
   <td style="text-align:left;"> (0.335) </td>
   <td style="text-align:left;"> (0.163) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Export-related*l </td>
   
   
   <td style="text-align:left;"> 0.042 </td>
   <td style="text-align:left;"> 0.132** </td>
  </tr>
  <tr>
   
   
   
   <td style="text-align:left;"> (0.036) </td>
   <td style="text-align:left;"> (0.059) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> % foreign </td>
   <td style="text-align:left;"> -0.008 </td>
   <td style="text-align:left;"> -0.026* </td>
   <td style="text-align:left;"> -0.009 </td>
   <td style="text-align:left;"> -0.007 </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.007) </td>
   <td style="text-align:left;"> (0.014) </td>
   <td style="text-align:left;"> (0.007) </td>
   <td style="text-align:left;"> (0.011) </td>
  </tr>
  <tr>
   <td style="text-align:left;"> R-sq </td>
   <td style="text-align:left;"> - </td>
   <td style="text-align:left;"> 0.028 </td>
   <td style="text-align:left;"> - </td>
   <td style="text-align:left;"> 0.355 </td>
  </tr>
</tbody>
</table>
]

---

<br />

# Import value, TFP, and trade policies

- Lastly, I investigate if the main driver of the TFP changes is import.

- I use PPML (Silva and Tenreyro 2008) to regress import value (LHS) against the three different TFPs and trade policies.
  - TFPs are used for interaction as well.

- Gravity variables are sourced from CEPII.

- The regression is conducted in HS-8-digit level.

- Fixed effects (right table) are ISIC, country of origin, and year<sup>1</sup>.

---

<br />

# Import value, TFP, and trade policies

.pull-left[
<table class="table table-striped" style="font-size: 10px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Variables </th>
   <th style="text-align:left;"> tfp1 </th>
   <th style="text-align:left;"> tfp2 </th>
   <th style="text-align:left;"> VaL </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> tfp </td>
   <td style="text-align:left;"> 0.113*** </td>
   <td style="text-align:left;"> 0.312*** </td>
   <td style="text-align:left;"> 0.331*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.013) </td>
   <td style="text-align:left;"> (0.017) </td>
   <td style="text-align:left;"> (0.032) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> tariff </td>
   <td style="text-align:left;"> -0.546*** </td>
   <td style="text-align:left;"> -0.600*** </td>
   <td style="text-align:left;"> -0.841*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.100) </td>
   <td style="text-align:left;"> (0.144) </td>
   <td style="text-align:left;"> (0.247) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> SPS </td>
   <td style="text-align:left;"> 1.076*** </td>
   <td style="text-align:left;"> 1.577*** </td>
   <td style="text-align:left;"> 2.026*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.277) </td>
   <td style="text-align:left;"> (0.280) </td>
   <td style="text-align:left;"> (0.324) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> TBT </td>
   <td style="text-align:left;"> -1.090*** </td>
   <td style="text-align:left;"> -1.106*** </td>
   <td style="text-align:left;"> -1.903*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.286) </td>
   <td style="text-align:left;"> (0.281) </td>
   <td style="text-align:left;"> (0.301) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Pre-shipment </td>
   <td style="text-align:left;"> -1.852*** </td>
   <td style="text-align:left;"> -1.910*** </td>
   <td style="text-align:left;"> -2.655*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.581) </td>
   <td style="text-align:left;"> (0.588) </td>
   <td style="text-align:left;"> (0.751) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> licensing </td>
   <td style="text-align:left;"> 1.211*** </td>
   <td style="text-align:left;"> 2.612*** </td>
   <td style="text-align:left;"> 2.065*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.419) </td>
   <td style="text-align:left;"> (0.436) </td>
   <td style="text-align:left;"> (0.520) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Price-control </td>
   <td style="text-align:left;"> 25.021*** </td>
   <td style="text-align:left;"> 22.841*** </td>
   <td style="text-align:left;"> 27.486*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (6.582) </td>
   <td style="text-align:left;"> (7.251) </td>
   <td style="text-align:left;"> (7.961) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> competition </td>
   <td style="text-align:left;"> 3.581*** </td>
   <td style="text-align:left;"> 2.027* </td>
   <td style="text-align:left;"> 4.164*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (1.159) </td>
   <td style="text-align:left;"> (1.140) </td>
   <td style="text-align:left;"> (1.264) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Export-related </td>
   <td style="text-align:left;"> 0.509 </td>
   <td style="text-align:left;"> 0.926* </td>
   <td style="text-align:left;"> 1.234* </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.525) </td>
   <td style="text-align:left;"> (0.540) </td>
   <td style="text-align:left;"> (0.668) </td>
  </tr>
</tbody>
</table>
]

.pull-right[
<table class="table table-striped" style="font-size: 10px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Variables </th>
   <th style="text-align:left;"> tfp1 </th>
   <th style="text-align:left;"> tfp2 </th>
   <th style="text-align:left;"> VaL </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> tfp </td>
   <td style="text-align:left;"> 0.136*** </td>
   <td style="text-align:left;"> 0.342*** </td>
   <td style="text-align:left;"> 0.226*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.017) </td>
   <td style="text-align:left;"> (0.021) </td>
   <td style="text-align:left;"> (0.033) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> tariff </td>
   <td style="text-align:left;"> -0.464*** </td>
   <td style="text-align:left;"> -0.433*** </td>
   <td style="text-align:left;"> -0.743*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.121) </td>
   <td style="text-align:left;"> (0.163) </td>
   <td style="text-align:left;"> (0.248) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> SPS </td>
   <td style="text-align:left;"> 1.191*** </td>
   <td style="text-align:left;"> 1.632*** </td>
   <td style="text-align:left;"> 1.771*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.299) </td>
   <td style="text-align:left;"> (0.309) </td>
   <td style="text-align:left;"> (0.331) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> TBT </td>
   <td style="text-align:left;"> -1.100*** </td>
   <td style="text-align:left;"> -1.071*** </td>
   <td style="text-align:left;"> -1.698*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.284) </td>
   <td style="text-align:left;"> (0.279) </td>
   <td style="text-align:left;"> (0.304) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Pre-shipment </td>
   <td style="text-align:left;"> -2.632*** </td>
   <td style="text-align:left;"> -2.658*** </td>
   <td style="text-align:left;"> -3.145*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.649) </td>
   <td style="text-align:left;"> (0.658) </td>
   <td style="text-align:left;"> (0.768) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> licensing </td>
   <td style="text-align:left;"> 1.359*** </td>
   <td style="text-align:left;"> 2.650*** </td>
   <td style="text-align:left;"> 1.636*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.457) </td>
   <td style="text-align:left;"> (0.470) </td>
   <td style="text-align:left;"> (0.521) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Price-control </td>
   <td style="text-align:left;"> 33.873*** </td>
   <td style="text-align:left;"> 31.596*** </td>
   <td style="text-align:left;"> 32.040*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (7.584) </td>
   <td style="text-align:left;"> (7.985) </td>
   <td style="text-align:left;"> (7.898) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> competition </td>
   <td style="text-align:left;"> 3.241*** </td>
   <td style="text-align:left;"> 1.892* </td>
   <td style="text-align:left;"> 3.855*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (1.080) </td>
   <td style="text-align:left;"> (1.080) </td>
   <td style="text-align:left;"> (1.163) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Export-related </td>
   <td style="text-align:left;"> 0.815 </td>
   <td style="text-align:left;"> 1.300* </td>
   <td style="text-align:left;"> 1.347* </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.649) </td>
   <td style="text-align:left;"> (0.676) </td>
   <td style="text-align:left;"> (0.722) </td>
  </tr>
</tbody>
</table>
]

---

<br />

# Import value, TFP, and trade policies

.pull-left[
<table class="table table-striped" style="font-size: 10px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Variables </th>
   <th style="text-align:left;"> tfp1 </th>
   <th style="text-align:left;"> tfp2 </th>
   <th style="text-align:left;"> VaL </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> tariff*tfp </td>
   <td style="text-align:left;"> 0.035*** </td>
   <td style="text-align:left;"> 0.030** </td>
   <td style="text-align:left;"> 0.045** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.012) </td>
   <td style="text-align:left;"> (0.014) </td>
   <td style="text-align:left;"> (0.021) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> SPS*tfp </td>
   <td style="text-align:left;"> -0.044 </td>
   <td style="text-align:left;"> -0.114*** </td>
   <td style="text-align:left;"> -0.179*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.041) </td>
   <td style="text-align:left;"> (0.042) </td>
   <td style="text-align:left;"> (0.049) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> TBT*tfp </td>
   <td style="text-align:left;"> 0.157*** </td>
   <td style="text-align:left;"> 0.159*** </td>
   <td style="text-align:left;"> 0.273*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.038) </td>
   <td style="text-align:left;"> (0.037) </td>
   <td style="text-align:left;"> (0.040) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Pre-shipment*tfp </td>
   <td style="text-align:left;"> 0.387*** </td>
   <td style="text-align:left;"> 0.395*** </td>
   <td style="text-align:left;"> 0.488*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.082) </td>
   <td style="text-align:left;"> (0.083) </td>
   <td style="text-align:left;"> (0.108) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> licensing*tfp </td>
   <td style="text-align:left;"> -0.172*** </td>
   <td style="text-align:left;"> -0.372*** </td>
   <td style="text-align:left;"> -0.306*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.056) </td>
   <td style="text-align:left;"> (0.058) </td>
   <td style="text-align:left;"> (0.072) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Price-control*tfp </td>
   <td style="text-align:left;"> -4.530*** </td>
   <td style="text-align:left;"> -4.204*** </td>
   <td style="text-align:left;"> -4.890*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.995) </td>
   <td style="text-align:left;"> (1.096) </td>
   <td style="text-align:left;"> (1.201) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> competition*tfp </td>
   <td style="text-align:left;"> -0.372** </td>
   <td style="text-align:left;"> -0.161 </td>
   <td style="text-align:left;"> -0.476*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.162) </td>
   <td style="text-align:left;"> (0.157) </td>
   <td style="text-align:left;"> (0.177) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Export-related*tfp </td>
   <td style="text-align:left;"> -0.139* </td>
   <td style="text-align:left;"> -0.197*** </td>
   <td style="text-align:left;"> -0.247** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.074) </td>
   <td style="text-align:left;"> (0.076) </td>
   <td style="text-align:left;"> (0.097) </td>
  </tr>
  <tr>
   <td style="text-align:left;"> observations </td>
   <td style="text-align:left;"> 192,928 </td>
   <td style="text-align:left;"> 192,928 </td>
   <td style="text-align:left;"> 192,928 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> R-sq </td>
   <td style="text-align:left;"> 0.009 </td>
   <td style="text-align:left;"> 0.009 </td>
   <td style="text-align:left;"> 0.011 </td>
  </tr>
</tbody>
</table>
]

.pull-right[
<table class="table table-striped" style="font-size: 10px; margin-left: auto; margin-right: auto;">
 <thead>
  <tr>
   <th style="text-align:left;"> Variables </th>
   <th style="text-align:left;"> tfp1 </th>
   <th style="text-align:left;"> tfp2 </th>
   <th style="text-align:left;"> VaL </th>
  </tr>
 </thead>
<tbody>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> tariff*tfp </td>
   <td style="text-align:left;"> 0.027* </td>
   <td style="text-align:left;"> 0.016 </td>
   <td style="text-align:left;"> 0.038* </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.015) </td>
   <td style="text-align:left;"> (0.016) </td>
   <td style="text-align:left;"> (0.021) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> SPS*tfp </td>
   <td style="text-align:left;"> -0.073 </td>
   <td style="text-align:left;"> -0.135*** </td>
   <td style="text-align:left;"> -0.155*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.045) </td>
   <td style="text-align:left;"> (0.046) </td>
   <td style="text-align:left;"> (0.050) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> TBT*tfp </td>
   <td style="text-align:left;"> 0.172*** </td>
   <td style="text-align:left;"> 0.167*** </td>
   <td style="text-align:left;"> 0.256*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.038) </td>
   <td style="text-align:left;"> (0.036) </td>
   <td style="text-align:left;"> (0.041) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Pre-shipment*tfp </td>
   <td style="text-align:left;"> 0.458*** </td>
   <td style="text-align:left;"> 0.461*** </td>
   <td style="text-align:left;"> 0.535*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.092) </td>
   <td style="text-align:left;"> (0.092) </td>
   <td style="text-align:left;"> (0.110) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> licensing*tfp </td>
   <td style="text-align:left;"> -0.217*** </td>
   <td style="text-align:left;"> -0.402*** </td>
   <td style="text-align:left;"> -0.258*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.062) </td>
   <td style="text-align:left;"> (0.064) </td>
   <td style="text-align:left;"> (0.073) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Price-control*tfp </td>
   <td style="text-align:left;"> -5.759*** </td>
   <td style="text-align:left;"> -5.423*** </td>
   <td style="text-align:left;"> -5.507*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (1.138) </td>
   <td style="text-align:left;"> (1.199) </td>
   <td style="text-align:left;"> (1.184) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> competition*tfp </td>
   <td style="text-align:left;"> -0.370** </td>
   <td style="text-align:left;"> -0.185 </td>
   <td style="text-align:left;"> -0.464*** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.150) </td>
   <td style="text-align:left;"> (0.149) </td>
   <td style="text-align:left;"> (0.161) </td>
  </tr>
  <tr>
   <td style="text-align:left;vertical-align: middle !important;" rowspan="2"> Export-related*tfp </td>
   <td style="text-align:left;"> -0.173* </td>
   <td style="text-align:left;"> -0.241** </td>
   <td style="text-align:left;"> -0.253** </td>
  </tr>
  <tr>
   
   <td style="text-align:left;"> (0.093) </td>
   <td style="text-align:left;"> (0.097) </td>
   <td style="text-align:left;"> 0.106 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> observations </td>
   <td style="text-align:left;"> 192,928 </td>
   <td style="text-align:left;"> 192,928 </td>
   <td style="text-align:left;"> 192,928 </td>
  </tr>
  <tr>
   <td style="text-align:left;"> R-sq </td>
   <td style="text-align:left;"> 0.012 </td>
   <td style="text-align:left;"> 0.013 </td>
   <td style="text-align:left;"> 0.013 </td>
  </tr>
</tbody>
</table>
]

---

# Discussion and Policy Recommendation

---

<br />

# Discussions

##### Trade policies and TFPs
- tariff is negatively affecting TFPs, and the impact is less profound for bigger firms:
  - consistent when fixed effects are used
- Only two NTMs are significant after fixed effects: licensing and competition measures.
- More productive firms import more
- NTM have mixed results: Only TBT and preshipment reduces import

##### Employment
- Tariff also reduces employment, but bigger firms have smaller effect.
- Not all NTMs show a visible significance:
  - SPS, licensing, and export-related measures have the same directional impact as tariff.
  - Pre-shipment inspection have different direction

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<br />

# Policy recommendation

- More import restriction isn't great:
  - especially if the goal is manufacturing productivity growth.
  - less competitive firms: 
      - less competitive products.
      - less non-commodity exports.
  - may lead to more downstream protection.
  - invites retaliations and decoupling.
  
- Targeting CAD may not be ideal
  - Intervening with trade is usually inefficient:
      - Halting GVC may lead to even more reliance on commodities to keep `$CA>0$`
  - the real problem may not actually be trade:
      - discourage import but let SOE issues foreign borrowing?
      - bad debt management `$\Rightarrow$` costing manufacturers and consumers
  
- CAD may be necessary for growth (at least in short-medium run)

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<br />

# Caveats

- NTMs have mixed results.
  - Count data isn't ideal
  - May have different impact for different types of NTMs
  - May have different impact on different goods
  - More in-depth studies are needed
  
- The sample is quite restrictive.
  - Importers are different compared to general firms
  - the number of importers is very small
  
- Data isn't perfect.
  - NTM collected in 2015 have slight variation compared to 2018
  - SI have many problems
  - Customs have not go beyond 2012 yet

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# The End